Health insurance that isn’t
The Myth of Health Insurance is an interesting look at why health insurance is different from any other kind.
What we call “health insurance” has little to do with health and nothing to do with insurance. We do not face a “health insurance crisis.” We face the consequences of a set of economic and social problems rooted in a futile effort to make the distribution of health care—unlike the distribution of virtually every other good and service in our society—egalitarian.
And:
The sole rational purpose of true insurance is to protect the insured from an unanticipated economic loss so large as to jeopardize his economic well-being. No one sells or buys insurance to cover the cost of maintaining his property. Home insurance does not pay for plumbing repairs; automobile insurance does not pay for replacing worn-out windshield wipers. Yet people demand precisely this kind of reimbursement from so-called health insurance.
And especially:
In fact, Americans now view their health insurance as an open-ended entitlement for reimbursement for virtually any expense that may be categorized as “health care,” such as the cost of birth-control pills or Viagra. The cost of these services is covered on the same basis as the cost of medical catastrophes, such as treatment for the consequences of a brain tumor. Such distorted incentives produce the perverted outcomes with which we are all too familiar.
This has consequences for life extension. What will insurance companies pay for? As treatments become more advanced, people will certainly begin demanding them. The costs of the treatments are certainly going to be an issue, especially before economies of scale kick in. And not everyone is going to be able to afford them, which is going to make people look toward their insurance providers.
Via Digg.
August 28th, 2006 at 7:32 pm
Not too sure about this. I presume the principles of insurance work wherever the fear of distress enables people to put in more over time than they will probably get out. Getting paid for the small things might well reinforce the commitment to paying to defray the risk of the large things.
I can certainly see how that could be unbalanced - too many small things, and the system is wrecked. In an increasingly medicalised society, with a heap of repairs available, those small bills can mount up for an insurer.
I guess another issue is the way in which a lot of problems - a sprained ankle, for instance - requires increasingly elaborate physio, so the bill can quickly become alarming. A sprained ankle may not seem much, but if it is not repaired, we can have a permanent loss of function. Given our increasingly athletic approach to age, we are going to get a lot more of these soft tissue things, and have more need of medical insurance.. and so it escalates.
However, I have heard medical economists say the situation is not as bad as it seems. While treatments become more extreme and more expensive, we are also developing much better public health and preventative measures. To some extent, the two are balancing out.
But here’s a really interesting angle - as public health improves, more and more costs are incurred only in the last year of life. That is apparently already the case. Its that time which really costs. Presumably, as we get better and better at knowing the progression of diseases, we will be more and more tempted to settle for palliative care. Or even the big green needle.
I do know of acute care people who say it is the families that try and keep people alive, not the doctors, and not the patients.